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Global carmakers form blockchain technology coalition

Some of the world's biggest auto companies have teamed up with tech providers and startups to form a consortium aimed at developing automotive uses for blockchain, the database technology known from cryptocurrencies.

The new consortium, which calls itself Mobility Open Blockchain Initiative (MOBI) was announced at the Future Blockchain Summit in Dubai on Wednesday.

Headed by auto industry veteran Chris Ballinger, who last month left Toyota's Research Institute as Chief Financial Officer, the group brings together auto industry heavyweights such as General Motors (GM), BMW, Renault, Bosch, ZF Friedrichshafen.

Also on board is US tech giant IBM and a group of blockchain technology pioneers such as BigChainDB, Deon Digital AG, Chronicled, ContextLabs, Crypto Valley Association, Hyperledger, IOTA, NuCypher, Oaken Innovation and the Trusted Internet of Things Alliance just to mention a few.

MOBI will not push any specific type of distributed ledger, but rather aims to create common standards to enable payments and data-sharing between cars, meaning a new digital mobility ecosystem that spans from ride-sharing to self-driving vehicles.

MOBI chairman and its first chief executive Chris Ballinger said that blockchain was a technology where the network effects would be very strong. "If you're not in at the very start, it may be too late," he added.

Although the world's biggest carmakers, Volkswagen and Toyota, have not signed on as partners yet, MOBI members account for about 70 percent of global car production.

Blockchain is considered to be an unhackable transaction system, with proponents arguing that the lack of a central management authority ensures that the data is virtually tamper-proof because actors would need to hack multiple data storage locations to alter information.

Practical uses for blockchain in the automotive sector could include payment services for tolls and electric vehicle charging stations as well as creating public records that track vehicles and parts in the supply chain.

Sachin Lulla, the head of IBM's Global Automotive Strategy & Solutions, told the Dubai conference that currently blockchain was "a big buzzword," but very few people would understand its potential. "Which is why these consortiums play a big role; they bring the technology to life. We've made a big bet on the enterprise, but now it's bringing in an ecosystem of partners very, very quickly," he said.

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Common standards and critical mass

As the automotive sector faces massive challenges from electric carmakers, new mobility services and software groups aiming to disrupt the industry, automakers have increasingly been teaming up with partners to ensure they are not losing the race for new products and solutions.

Teodors Lio from consulting firm Accenture, which is also part of the consortium, said that widespread adoption of MOBI's blockchain standard was crucial for the consortium. "If only one player pushes, it will be extremely hard to make it happen for the industry."

Chris Ballinger also said that in his previous job at Toyota he the need for a consortium after conducting several blockchain proofs-of-concept with startups. "You really have to have common standards and common ways for cars to communicate, to identify themselves and make payments. But if each auto company is trying to develop its own car wallets or its own way of paying tolls, or providing a ride sharing service, it just doesn't work; it's the Tower of Babel," he told reporters in Dubai.

Therefore, MOBI's initial goal would be to convince as many carmakers as possible to assign digital identities to vehicles coming off the line, which will allow them to access blockchain platforms that run mobility services. As a benefit, this would allow the industry to tap into new revenue streams under efforts to monetize vehicle location and consumer data.